KEY TERMS & NEW PRODUCT DEVELOPMENT

1. Explain how companies find and develop new-product ideas

2. List and define the steps in the new-product development process and the major considerations in managing this process

3. Describe the stages of the product life cycle

4. Describe how marketing strategies change during the product’s life cycle

5. Discuss two additional product and services issues: socially responsible product decisions and international product and services marketing

LEARNING OBJECTIVES

Needs: Basic human requirementsExamples- Food, water, and shelter

Wants: Needs become wants when a person decided a specific item would satisfy a need. Examples- Specific food items and flavors of drinks

Demand Willingness to buy Willingness to pay Ability to pay

BASIC MARKETING CONCEPTS

BASIC MARKETING CONCEPTS

Product- an offering that can satisfy a need or wantExamples- goods, services, experiences, events, properties, and ideas

Value- the ratio between what the customer gets and what he givesValue = Benefits ÷ CostsBenefits- functional and emotional in natureCosts- monetary, time, and energy related costs

Satisfaction- A person’s feelings of pleasure or displeasure resulting from comparing a product’s perceived performance to his or her expectations.

Market- A group of buyers and sellers interested in negotiating the terms of purchase or sale of goods or services.

BASIC MARKETING CONCEPTS

Marketing- An organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Marketing Management- The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals.

BASIC MARKETING CONCEPTS

Marketing Management: The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals

BASIC MARKETING CONCEPTS

Marketing can be described as an on-going process of: Discovering and translating consumer needs and desires into products and services

Creating a demand for these products and services

Serving the consumer demand with the help of marketing channels

Expanding the market even in the face of keen competition

BASIC MARKETING CONCEPTS

Marketing Mix1. Product

Includes product variety, quality, design, features, brand name, packaging, warranties

2. Price Includes list price, discounts and payment period

BASIC MARKETING CONCEPTS

3. Place Includes distribution channels,

coverage, locations, inventory4. Promotion

Includes advertising, public relations and direct marketing

A firm can obtain new products throughAcquisition

Buying of a whole company, a patent or a license to produce a product owned by another person

New product developmentGenerating original products, product improvements, product modification, and new brands devised from the firm’s own research and development

NEW PRODUCT DEVELOPMENT

STRATEGIES

To create successful new products, the company must Understand its customers, markets and competitors

Develop products that deliver superior value to customers

Follow public policy and laws regarding developing products, patents, quality and safety

NEW PRODUCT DEVELOPMENT

STRATEGIES

New product development can be: Customer-centered Sequential Team-centered Systematic

NEW PRODUCT DEVELOPMENT

STRATEGIES

Focusing on finding new ways create more customer-satisfying experiences

Begins and ends with solving customer problems

CUSTOMER-CENTERED DEVELOPMENT

Company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage

Increases control in risky or complex projects

Slower than the other types of development

SEQUENTIAL DEVELOPMENT

Company departments form multiple cross-functional teams that overlap each other during the product development process to save time and increase effectiveness

Team-based development can be more confusing and increase more tension than sequential

Team-based development is also faster and more flexible than sequential

TEAM-BASED DEVELOPMENT

An innovative approach that collects, reviews, evaluates, and manages new product ideas

Creates an innovation-oriented culture

Yields a large number of new product ideas

SYSTEMATIC DEVELOPMENT

Overestimation of market size Poor design Wrong timing Priced too high Ineffective promotion Management influence High development costs Competition

REASONS FOR NEW PRODUCT FAILURE

1. Idea generation2. Idea screening3. Concept development and testing4. Marketing strategy development5. Business analysis6. Product development7. Test marketing8. Commercialization

NEW PRODUCT DEVELOPING PROCESS

New idea generation- the systematic search for new product ideas

Sources of new product ideas Internal

The company’s own formal research & development, management & staff, and entrepreneurial programs

External Sources outside the company such as customers,

competitors, distributors, suppliers, and outside design firms

IDEA GENERATION

Ideas screening- reviewing new product ideas in order to drop poor ones as soon as possible

CriteriaMarket sizeProduct priceDevelopment time and costManufacturing costsRate of return

IDEA SCREENING

Product idea- An idea for a possible product that the company can see itself offering to the marketing

Product concept- A detailed version of the idea stated in meaningful consumer terms

Product image- The way consumers perceive an actual or potential product

Concept testing- Testing new product concepts with groups of target consumers

CONCEPT DEVELOPMENT AND TESTING

Market strategy development – the initial marketing strategy for introducing the product to the market

Marketing Strategy Statement Part 1:

Description of the target market Product positioning, sales, market share, and profit goals

Part 2: Price, distribution, and marketing budget

Part 3: Long term sales, profit goals, and marketing mix strategy

MARKET STRATEGY DEVELOPMENT

If attempting to sell a product to an international market, companies need to be mindful about what they are selling and to whom. You will need to change your market strategy.

Examples of challenges that arise Determining what products and services to introduce

in which countries Whether your should standardize or customize your

product to cater to the new area Packaging and labeling clearly Following customs, values and laws

INTERNATIONAL PRODUCT AND SERVICE MARKETING

Business analysis- the review of the sales, costs, and profits projections to find out whether they satisfy the company’s objectives

BUSINESS ANALYSIS

Product development- involves the creation and testing of one or more physical versions by the R&D or engineering departmentRequires an increase in investment

PRODUCT DEVELOPMENT